DME PANEL CONTRACTS John Fisher Program Manager – Procurement

Obtaining value in the expenditure of public money Providing for ethical and fair treatment of participants Ensuring probity, accountability and transparency in the procurement process DME OVERALL PRINCIPLES

Commonwealth Purchasing Manual 1983 SA State Procurement Board – Panel Contracts Guidelines Victorian Government Procurement DME REFERENCES

A panel contract (panel arrangement or standing offer) is a contractual arrangement established with at least two suppliers for the anticipated provision of goods or services, as and when required over a specified period of time. The panel contract contains standard terms and conditions under which the goods or services will be provided by panel members. DME DEFINITION PANEL CONTRACT

PERIOD CONTRACTS PERIOD CONTRACT OR STANDING OFFER Agreement under which a vendor allows a buyer to purchase specified goods or services at a predetermined price for a certain period on an 'as and when' requirement basis and in such quantities as may be ordered from time to time. Typically although estimated quantities may be provided there is no commitment to buy any quantity at all. DME

FORMS OF PERIOD CONTRACTS Single Supplier – one contractor supplies good or services at set prices Multiple Suppliers – supply a range of goods and services at set prices Panel Contract – available for a range of services and competitive quotes are sought for each order

the requirements occurs frequently and is general conformity with commercial standards; storage is impractical, uneconomical or undesirable; support can be secured from a sufficient number of Councils prepared to use the with a panel of providers; there is a strong and ongoing demand for the good or service; The requirement cannot be adequately predicted in advance and may be required at short notice; the volume of work may be too large for one supplier to undertake; there is an advantage in having a choice of suppliers (e.g. to avoid potential conflicts of interest; DME WHEN TO USE

BENEFITS achieving improved quality, service and prices through the combined purchasing; achieving cost savings by avoiding duplication in researching and approaching the supply market through preparing tender documents, calling and evaluating tenders and sourcing services; offering greater choice through access to multiple suppliers; having fast and streamlined access to suppliers through utilising established secondary procurement processes; standardising and increasing consistency in procurement processes and documentation; DME

BENEFITS reducing the costs for suppliers by having to respond to fewer tenders; predetermined contract terms, conditions and performance measures applying over a series of different requests; maintaining competitive tension over the period of the contract; minimising contract set up costs through the use of a standard common contract arrangement; and providing an opportunity for better strategic relationships with suppliers Allocation of specific spend delegations to ordering officers. DME

Effective contestable process Open tender Expression of Interest Restricted tender process Exemption process could apply to sole source arrangement DME ESTABLISHMENT

Closed - Panel is set for the term, no new providers allowed Open – Panels allow for the addition of new service providers through subsequent procurement or qualification processes. The lead entity must document how potential new suppliers are to be added to the panel contract and the circumstances and evaluation criteria for doing so DME OPEN & CLOSED PANELS

Generally discouraged but may be appropriate when: prices or rates are indicative and may change up or down; there is diverse expertise or a large number of suppliers in the market place; the requirement is broad; the market is emerging or immature, and there is a likelihood of new entrants and changes over time; the contract term is particularly long; new products, providers and technologies are constantly emerging; and where there is a strong potential for the governments purchasing power to influence the market, which would be restricted if the panel was closed to new entrants. DME USE OF OPEN PANELS

LEGAL ASPECTS Covered by a Deed of Agreement that sets out the terms and conditions of purchase when one occurs Contract – A word of caution Contract is only formed when an order is placed on the supplier DME

the nature, description and details of the goods or service that may be purchased under the panel arrangement; the period for which the panel arrangement is in force; a list of potential user Councils; price review mechanisms as appropriate; Reporting and supplier performance (KPIs); insurance and security requirements; standard contractual terms and conditions including limitation of liability, confidentiality, termination for default and convenience ; dispute resolution etc ; the secondary procurement processes for buying from the panel; and any special conditions. DME DEED OF AGREEMENT

Head Agreement – might be used this defines the relationship between the Aggregator and the Suppliers on the Panel – any administration fee arrangements, sales reporting, performance management requirements etc. A schedule can be used for pricing; order terms and conditions etc. DME DEMAND AGGREGATOR SCENARIO

Measurement of the intended objectives and benefits are realised: Continuous improvement KPI measurement Supplier leakage (rogue purchasing) DME CONTRACT MANAGEMENT

Upset suppliers who dont get the opportunities expected Continuous selection of a single supplier by users Using information from a panel to negotiate prices down is unethical DME ISSUES

The panel contract (period contract; panel arrangement; standing offer; common use arrangement) can provide an efficient, productive, fair and transparent purchasing mechanism that works within an organisations ordering system. DME SUMMARY